Correlation Between Stone Ridge and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Stone Ridge and Absolute Convertible at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Stone Ridge and Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stone Ridge Diversified and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Stone Ridge and Absolute Convertible and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Stone Ridge with a short position of Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Ridge and Absolute Convertible.
Diversification Opportunities for Stone Ridge and Absolute Convertible
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stone and Absolute is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible and Stone Ridge is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Stone Ridge Diversified are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Stone Ridge i.e., Stone Ridge and Absolute Convertible go up and down completely randomly.
Pair Corralation between Stone Ridge and Absolute Convertible
Assuming the 90 days horizon Stone Ridge Diversified is expected to under-perform the Absolute Convertible. In addition to that, Stone Ridge is 2.77 times more volatile than Absolute Convertible Arbitrage. It trades about -0.11 of its total potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.59 per unit of volatility. If you would invest 1,119 in Absolute Convertible Arbitrage on November 7, 2024 and sell it today you would earn a total of 8.00 from holding Absolute Convertible Arbitrage or generate 0.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stone Ridge Diversified vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Stone Ridge Diversified |
| Absolute Convertible |
Stone Ridge and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stone Ridge and Absolute Convertible
The main advantage of trading using opposite Stone Ridge and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge position performs unexpectedly, Absolute Convertible can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Stone Ridge vs. Federated Emerging Market | Stone Ridge vs. Franklin Emerging Market | Stone Ridge vs. Calvert Developed Market | Stone Ridge vs. Old Westbury Short Term |
| Absolute Convertible vs. T Rowe Price | Absolute Convertible vs. Barings High Yield | Absolute Convertible vs. The Hartford High | Absolute Convertible vs. Rbc Bluebay Global |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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